Pandora will undertake a “strategic review” of whether it will sell itself to an acquirer. If not, it’s agreed to take a cash infusion to maintain “a strong balance sheet” as it struggles to shift from radio to the increasingly popular on-demand streaming model.
Private equity firm KKR has agreed to buy $150 million in Series A preferred Pandora shares a month from now and be paid a 7.5 percent or 8 percent quarterly dividend while KKR’s Richard Sarnoff takes a board seat. Meanwhile, two Pandora board members James M. P. Feuille and Peter Gotcher will resign as the board considers the music company’s options.
The news came alongside Pandora’s mixed earnings report, where its $316 million in revenue fell short of the $318 million estimate, though its delivered a loss of $0.24 EPS per share compared to an expected $0.34 EPS loss.
Total Pandora subscribers grew 20% year-over-year to 4.71 million in Q1 2017, with 500,000 trial starts of its new Pandora Premium on-demand service. 80% of trial subscribers came from upsells to its existing users. But total listener hours slipped from 5.52 billion in Q1 2016 to 5.21 billion this quarter, while active listeners fell from 79.4 million to 76.7 million. Ticketing revenue from its $450 million acquisition of Ticketfly came in at $27.8 million, up 25% year-over-year.
The KKR cash could help Pandora gain some momentum. Here are the nuts and bolts of the deal:
“KKR will purchase an aggregate of $150…